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Beebe Prepares For Last Regular Session

By Andrew DeMillo

The Associated Press

LITTLE ROCK — When the 89th General Assembly gavels in for this year’s session Monday, it’ll mark the last chance for Gov. Mike Beebe to make his mark legislatively on a state after serving six years in office. Barring a special session or unless he tries to push for non-budget items in next year’s fiscal session, the legislative agenda Beebe lays out this week will be his last as governor.

The term-limited Democratic governor, however, says don’t expect to see a last-ditch effort to polish off his legacy.

“I don’t see it as a swan song as much as I do a continuation of where we are,” Beebe said in an interview this month with The Associated Press. “I would hate to think we waited until the last session to start doing something I thought was important.”

With a $138 million shortfall in the state’s Medicaid budget and a Legislature that will be controlled by Republicans for the first time since Reconstruction, Beebe faces a challenging political environment that will limit his ability to push for too many far-reaching changes in this year’s session.

Beebe, who was re-elected in 2010, has seen most of his legislative priorities approved under Democrat majorities in the Legislature since taking office in 2007. They’ve included cuts in the state’s grocery tax, a cigarette tax hike for a statewide trauma system, an economic development incentive fund he’s used to lure companies to the state and an overhaul of Arkansas’ sentencing laws.

Beebe has offered few hints about the proposals he’ll lay out in his State of the State address to a joint session of the House and Senate on Tuesday, but he has said to not expect too many surprises from him in this year’s session. Two of his biggest agenda items have been well-known for months.

The first is his support for expanding the state’s Medicaid program under the federal health care law, a move that would add 250,000 people in the state to the program. The U.S. Supreme Court ruling that upheld the federal overhaul left it up to states to decide whether to enact the expansion, and it’ll take the support of three-fourths of both chambers.

The health-care law calls for the federal government to pay the full tab for the Medicaid expansion when it begins in 2014. After three years, states must pay a gradually increasing share that tops out at 10 percent of the cost.

Beebe last year said he would push for the expansion after receiving assurances from the federal government that Arkansas could drop the expanded coverage later if it couldn’t afford the additional cost.

Republicans in general have opposed the expansion, with many GOP candidates campaigning against the idea before the November election. But GOP leaders in the House and Senate have left open the possibility of a compromise that would allow for changes to the program they believe could save money in the long run.

They’re also holding out hope that Beebe could convince the federal government to reconsider its decision to not allow states to opt for a partial expansion and still receive the federal funding. Beebe said he’s willing to talk with the federal government about more flexibility for the state, but warns: “I don’t have any magic wand.”

Beebe said he won’t rush lawmakers on considering the expansion, and so far isn’t ruling out any of the reforms that Republicans have floated as part of a Medicaid compromise.

“This is a joint effort. I’m a product of the Legislature,” said Beebe who served 20 years in the state Senate. “I have a great deal of respect for the institution and its role.”

The session also marks Beebe’s last chance to follow through on his promise to phase out the state’s sales tax on groceries, an idea he campaigned on in his 2006 bid for the state’s top office. Beebe has successfully pushed for cutting the tax from 6 percent to 1.5 percent since taking office in 2007.

This year, Beebe has called for cutting the tax to 0.125 percent. The cut would eliminate all state sales tax on groceries except for a one-eighth cent tax for conservation approved by voters as part of a constitutional amendment.

Under the governor’s plan, the tax cut, which officials estimate would cost the state $69 million, would be triggered if obligations in several key areas decline by at least $35 million for six consecutive months. They include payments the state must make to three Little Rock-area school districts as part of a desegregation settlement and some state bond payments.

Incoming House Speaker Davy Carter and Senate President Michael Lamoureux, both Republicans, won’t say whether they support the grocery tax proposal and say they think there’s room to look at other potential reductions. Carter has said there’s interest among House members in income tax cuts, while Lamoureux has said the Senate wants to look at reducing the sales tax manufacturers pay for utilities and other cuts that he believes could help businesses.

Beebe said he’s willing to talk with lawmakers about other cuts, but said it would require cuts in other areas of his budget. He said the Medicaid shortfall is a major challenge that lawmakers didn’t face two years ago, when they reached a compromise on $35 million in tax cuts.

Beebe said tying his tax cut proposal to the possibility of the desegregation payments or other obligations decreasing shows just how tight the state’s budget is.

“If I didn’t think it was a more difficult climate, I would have proposed a more specific and immediate reduction in my favorite tax reduction,” Beebe said. “If I’m reluctant to do what is my top tax cut choice, that ought to tell you the seriousness with which I look at this total budget.”